Lynas, MP sign US RE plant design contracts: Update

Spanish Market: Metals
27/07/20

Updates to include estimated size of award and second tender winner MP Materials, adds context throughout

Australian rare earth producer Lynas and US producer MP Materials have signed contracts with the US Department of Defense (DoD) to carry out design and engineering work for two US heavy rare earth separation plants.

The conclusion of the contracts was delayed by several months by political wrangling in the US but the DoD project now appears to be back on track. The size of the award for phase one design work is estimated at $1mn-5mn. The US at present has no commercial capacity to separate rare earths or large-scale commercial capacity to manufacture rare earth magnets, which are critical to defence, automotive, electronics and manufacturing.

Lynas is the only large rare earth producer outside China and supplies up to a fifth of global demand for light rare earth magnetic material neodymium and praseodymium oxide from ore mined at its Mount Weld deposit in Australia and separated at its processing plant in Malaysia.

MP Materials owns and operates the only producing rare earth mine in the US, Mountain Pass and currently produces a light rare earth concentrate that is marketed to China. MP is investing heavily in the development of processing capacity and is preparing to list on the New York stock exchange.

The amount of funding committed is small, but the project marks a key departure in terms of direct US government action on supply chain issues. The US initiative on rare earths goes back several years. President Donald Trump last year signed documents that freed up funds under the US Defence Production Act to develop US capacity to separate and process heavy rare earths, light rare earths, the production of neodymium-iron-born NdFeB magnets, samarium-cobalt magnets and rare earth metals and alloys.

Lynas will utilise its in-house intellectual property and track record in rare earths separation for the design work. Lynas entered an initial agreement with US rare earth technology firm Blue Line in May 2019 for a joint venture to develop rare earths separation capacity in the US, aiming to fill a gap in the US supply chain.

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24/12/24

Viewpoint: FeV demand may grow next year

London, 24 December (Argus) — Ferro-vanadium (FeV) demand, which is closely tied to the carbon steel sector, has the potential to grow next year after a sluggish 2024, but economic and geopolitical uncertainties make conditions difficult to forecast. The outlook suggests FeV consumption will increase, driven by global steel production growth, particularly in countries such as India, as well as a potential rebound in key markets such as the US and Europe. The World Steel Association (Worldsteel) sees 2025 demand rising by 1.2pc to 1.772bn t, after a slight contraction this year. Most of the major economies, including China, are likely to record lower steel demand this year, although India bucks the trend, with robust demand growth expected throughout 2025. In developed economies, steel demand could grow by 1.9pc next year, driven by a recovery in the EU and, to a lesser extent, in the US and Japan. Buyers in Europe have been wary about purchasing large volumes of FeV in recent weeks, with fewer volumes expected in next year's long-term contracts as steel plants are looking for more flexibility and are "afraid of buying material that in the end they might not need", a trading firm said. Construction The construction sector remains a crucial driver of FeV consumption, primarily because of its dependence on steel for infrastructure projects. But the construction industry's challenges, particularly residential construction in developed economies, have dampened overall steel demand. High borrowing costs have stifled housing activity, with interest rate hikes slowing building projects. "A meaningful recovery in residential construction (in the EU, US and South Korea) is expected to begin from 2025 onwards with the expected easing of financing conditions," Worldsteel said. Rebar production also has faced challenges, with Chinese steel mills reducing output on lower demand from the real-estate sector up to September, when new rebar standards were introduced by China's government. The new standards were intended to encourage higher vanadium content in steel, but the anticipated FeV demand boost has not yet materialised because overall appetite for the alloy remains suppressed by ongoing struggles in China's real-estate sector. China's rebar output fell by 1.9pc on the year to 17.7mn t in October , with January-October output showing a 14pc drop from the same period a year earlier, according to data from the National Bureau of Statistics. Without any lift from China, European FeV prices remain driven primarily by weakness in the continent's own construction sector, which continues to limit steel rebar trading volumes. Argus' weekly Italian domestic rebar assessment was at €550/t ex-works on 11 December, marking an 11pc drop from the start of this year. Automotive The automotive sector, particularly the electric vehicles (EV) market, will be a key driver of FeV demand next year. High-strength low-alloy (HSLA) steel — a type of carbon steel known for its superior strength-to-weight ratio — is crucial for light vehicles and EVs. While light vehicles and EV manufacturing has slowed this year, with factory closures and inventory reductions by major carmakers such as Volkswagen and Stellantis , the industry is expected to recover next year as the push towards sustainability continues. The green transition, which includes renewable energy projects and electric grid expansions, will further contribute to the demand for HSLA steel and, by extension, FeV. But EV growth is likely to slow in the short term under the administration of US president-elect Donald Trump, who could prioritise traditional energy sectors, potentially limiting support for renewables, industry participants said. By Roxana Lazar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US steel glut may dampen prices, profit

23/12/24

Viewpoint: US steel glut may dampen prices, profit

Houston, 23 December (Argus) — Persistent steel oversupply in the US may continue to dampen domestic steel prices and steel mill earnings as the market faces weak demand and rising import volumes. Buyers told Argus the market remains oversupplied and has been for most of 2024, despite US steelmakers lowering production through the first three quarters of 2024. Raw steel production was 66.21mn short tons (st) this year through 28 September, a 1.11mn st decline from the first three quarters of 2023, according to weekly data published by the American Iron and Steel Institute (AISI). While steel production is lower, many US buyers believe steelmakers are still producing too much material, making it easy to buy spot tons. The Argus US hot-rolled coil (HRC) lead time crossed into 2025 in mid-December, and HRC lead times have averaged 4.3 weeks in 2024, down from six weeks in 2023. Facing these factors, US steelmakers see lower profits or even losses during the final quarter of 2024 and potentially into 2025. The five largest steelmakers by production capacity — Cleveland-Cliffs, Commercial Metals (CMC), Nucor, SDI and US Steel — reported combined profits of $3.55bn for the first three quarters of 2024 — $4.35bn lower than the same period of 2023. In recent fourth quarter earnings guidance, Nucor and US Steel said they could post a profit and loss, respectively, at levels not seen since the third quarter of 2020. Demand pressured by high rates A decline in demand has been the fundamental issue this year and is expected to continue to be moving into 2025. Many service centers reported lower steel consumption forecasts for 2025 compared to this year, outpacing any decline in US steel production. Automotive production and steel consumption from automaker Stellantis is said to have sagged recently as that company struggles to tamp down high vehicle inventories . High interest rates constrained demand and put pressure on buying trends. The Associated General Contractors of America's (AGC) chief economist Ken Simonson said recently that increased federal government project announcements have not led to more construction contracts, and that spending for major private construction categories are flat or shrinking. Nonresidential construction is one of the largest consumers of steel products. That lower trend in nonresidential spending is being masked by higher residential investment, with construction spending at $2.17 trillion on a seasonally adjusted annual rate in October, 5pc above the same period the prior year and up by 0.4pc sequentially. Much of the increase was from higher spending in residential projects. Coupled with this lower demand, new and better operating steel mills could intensify the supply overhang. US Steel recently started up its new 3mn st/yr Big River 2 flat steel mill in northeast Arkansas and after years of production issues, Steel Dynamics' (SDI) 3mn st/yr Sinton, Texas, mill is operating at higher rates. Australian steelmaker BlueScope also reported that it is continuing to work on improving efficiency at its Ohio-based North Star flat steel mill, which it completed an expansion to last year. Farm tractor sales, another consumer of flat steel, stood at 196,000 units through November, down by 30,900 units from the same period the prior year. The higher production is coming online as steel prices are falling. The Argus US HRC Midwest assessment had a third quarter average of $680/st ex-works, down by 27pc since the first quarter average. Import volumes adding to oversupply Lower global steel costs have led to stubbornly elevated import volumes, despite persistent US oversupply and short lead times. Import volumes rose to 22.3mn st in the first three quarters of 2024, up by 431,000st from the same period prior year, according to data from the US Department of Commerce. By Rye Druzchetta US steel mill profits, production, steel imports and prices Through 3Q 2024 Through 3Q 2023 Difference US steel mill profits ($mn) Nucor 1,740 3,739 -(1,999) US Steel 473 975 -(502) Cleveland-Cliffs -(307) 554 -(861) SDI 1,330 2,027 -(697) CMC 309 598 -(289) US production US steel mill utilization rate (%) 76.7 76.9 -(0.2) Raw steel production ('000st) 66,212 67,325 -(1,113) Imports Quarterly steel product imports ('000st) 22,301 21,870 431 Argus-assessed pricing ($st) US HRC MW ex-works $796 $911 -($115) US rebar MW ex-works $809 $904 -($95) Company filings; AISI; US Department of Commerce; Argus CMC fiscal quarters adjusted to most relevant calendar year quarter. Utilization percentage rate and production tonnage estimates based on AISI data through 28 September. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: China SiMn prices face pressure in 2025

23/12/24

Viewpoint: China SiMn prices face pressure in 2025

Beijing, 23 December (Argus) — Chinese silico-manganese (SiMn) alloy prices are expected to face downward pressure in 2025, as unpromising steel outlooks may outpace potential further output curbs at most Chinese alloy smelters. Argus -assessed prices for 65/17-grade alloy fell to 6,000-6,150 yuan/t ($822-842/t) ex-works on 19 December, down from Yn8,200-8,500/t ex-works on 30 May, when prices rose to a multi-year high after Australia-based South32's output suspension at its Gemco mine sharply lifted manganese ore feedstock prices. A sustained decline in steel demand and mounting inventories at many alloy plants forced alloy spot prices downwards from June onwards, although more suppliers started to hold offers firm in the past few weeks on the back of higher ore costs and restocking purchases from steel mills before the end of this year. Slowing steel demand China's crude steel output in January-November fell by 2.7pc from a year earlier to 929.19mn t, according to data from China's National Bureau of Statistics. Steel production in November fell by 4.3pc from 81.88mn t in October. China's crude steel output is expected to have inched down further in December, as more domestic mills will conduct annual equipment maintenance before the end of this year, according to market participants. The output decline was attributed primarily to the weakening domestic real-estate sector, a major consumer of crude steel, in which investment from January-November fell by 10pc on the year. Domestic steel consumption has shown no signs of picking up, with regional steel prices having fallen in November. Shanghai's mainstream hot-rolled coil ex-warehouse prices assessed by Argus fell to Yn3,470/t on 29 November, down by Yn50 from 30 October. China's real-estate industry is still facing challenges, although the government has introduced fiscal policies that support the slowing construction sector. There remains the likelihood of a decline in sales and housing prices in 2025, according to market participants, given the current scale of unfinished projects and unsold house inventories. Reduced alloy output Lower steel demand during the economic slowdown and a squeeze in profit margins at most alloy plants caused by higher ore feedstock costs and lower bid prices caused Chinese Simn production to fall this year. Domestic output of the alloy is unlikely to recover in 2025 because of unprofitable margins and shrinking steel consumption. China's production of the bulk alloy is estimated to have fallen to about 10.45mn t this year, down from about 11.8mn t in 2023 and 9.85mn t in 2022, some market participants told Argus . More alloy plants in China's Inner Mongolia and Ningxia province were forced to cut or suspend operations in the first half of this year, particularly over March-May, when China's output fell by nearly 20pc on the year to about 2.34mn t. Inner Mongolia and Ningxia are China's key producing hubs for SiMn, accounting for 60-70pc of China's total production. Reduced alloy demand, falling alloy prices and lower shipments from South32 weighed on China's imports of manganese ore feedstock from main suppliers. China's manganese ore imports declined by 7.8pc on the year to 26.79mn t in January-November, customs data show. The average import price was $152/t for January-November, down by 3.7pc on the year. China's ore imports from Australia decreased by 55pc on the year to 2.11mn t in January-November, while China imported more ores from South Africa and Ghana to make up for the loss. Argus expects China's ore imports to rise next year as South32 restarted mining activity at its Gemco unit in June and is considering resuming exports next year. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Asia scrap set to face uncertainty in 2025

23/12/24

Viewpoint: Asia scrap set to face uncertainty in 2025

Singapore, 23 December (Argus) — The Asian scrap metal sector is poised to face a tumultuous start in 2025, coming under pressure from a supply glut of steel exports from China, persistently low steel demand and uncertainty stemming from mounting protectionist measures to safeguard domestic steel businesses. An ongoing oversupply of steel products is expected to exert continuous downward pressure on Asia's ferrous sector, at least in the first half-quarter of 2025. China's crude steel production is set to surpass the 1bn t mark again this year as production stood at 850.7mn t across January-October. And it is clear that domestic steel demand in the country has lagged behind supply. China exported 101.2mn t from January-November this year, marking a 22.6pc spike from the same period in 2023. The surge was particularly evident in October, when exports grew by 40.8pc year on year, hitting an eight-year high as Chinese mills sought export markets to relieve domestic sales pressures. Beijing has announced a series of stimulus measures since late September, but the impact of these measures so far has been limited to cushioning falls in the property market as the recovery in property sales has been largely confined to top-tier cities, and market participants expect any recovery to remain subdued in 2025. Taiwan Taiwan's ferrous sector has seen a series of setbacks this year in the form of natural calamities, geopolitical tensions, inclement weather and increased competition from cheap semi-finished steel from Russia, China and Indonesia. In addition, real-estate demand has been significantly lower since the third quarter of this year after Taiwan's central bank tightened credit controls. The weaker real-estate market has driven many construction companies to suspend or delay their projects, which dented steel and steel scrap demand further. The ferrous scrap price and demand outlook is mixed, and many participants foresee no improvements even by February or March. South Korea South Korean steelmakers have faced significant challenges this year, and the world's sixth-largest steel producer is expected to face persistent headwinds in 2025 on the global economic slowdown, stiff competition from other low-cost steel producers, potential tariffs under US president-elect Donald Trump's second term and rising electricity prices. South Korea's leading steelmaker, Posco, shut down its No 1 wire rod mill at the Pohang Steel Works in November, after 45 years of operation in response to a the global oversupply of wire rods and intensified competition from low-cost imports, particularly from China. Hyundai has also shut down its Pohang No 2 plant, which has capacity of 700,000t/yr for long products used in the construction sector. The closure of these operations, coupled with prolonged low demand, probably will limit South Korean buyers' appetite for steel scrap in the first quarter of next year. Vietnam But there is hope for another key Asian steelmaking and consumption hub — Vietnam. Finished steel product sales rose by 15.6pc on the year to 24.5mn t in the first 10 months of this year, while steel exports grew by 6.2pc to 7.1mn t, according to the Vietnam Steel Association. Scrap imports also increased, by 11.7pc on the year, during the period. Market participants expect domestic construction steel demand to increase next year, driven by government-led infrastructure projects aimed at achieving a GDP growth target of 6.5-7.0pc. On the flip side, Vietnam steelmakers are facing various anti-dumping investigations in other markets, and seaborne steel prices will be under pressure if the Chinese domestic steel market continues to show weakness in 2025. In addition, the export outlook from China may ease, with more countries introducing protectionist measures to safeguard their local steel industries. Several more countries this year have implemented or are considering imposing anti-dumping duties on Chinese steel products. These include major economies such as Japan, South Korea, Vietnam, the EU, India and Canada. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan carmakers Honda, Nissan start formal merger talks

23/12/24

Japan carmakers Honda, Nissan start formal merger talks

Tokyo, 23 December (Argus) — Japanese automakers Honda and Nissan said today they have officially started merger talks and are aiming to close a deal by June 2025. Fellow Japanese carmaker Mitsubishi is also considering joining the transaction. Honda and Nissan have signed an initial agreement to discuss a merger, including by setting up a joint holding company under which the current brands would operate as subsidiaries. Honda will appoint a majority of the holding company's board members including its president or representative director, Honda's president Toshihiro Mibe said on 23 December. Mitsubishi will make a final decision on whether to participate in the negotiations before the end of January 2025. A Honda representative told Argus on 18 December that the firm was exploring a possible merger with Nissan. Collaboration on the electrification of automobiles is one of the major reasons for the merger, according to Honda and Nissan. The firms agreed a strategic partnership in March to work together on electrification, studying possible areas of co-operation in developing automotive software platforms, core components relating to electric vehicles (EVs) and complementary products. Honda aims to electrify all its new cars by 2040 and is investing ¥10 trillion ($64bn) by 2030 partly to reduce battery costs, which account for around 30-40pc of the total cost of producing EVs, Mibe said in May. Honda's combined sales of EVs and fuel cell EVs (FCEVs) more than doubled to around 42,000 units in 2023, according to the company. But this only accounts for around 1pc of its total sales. Further investments on electrification by a single manufacturer are not feasible, Mibe said on 23 December. Nissan produced 3.4mn vehicles in 2023. It does not provide a precise breakdown for global EV sales, although it said in August 2023 that such sales had surpassed 1mn units since its first delivery in 2010. This is dwarfed by foreign EV competitors, including Chinese producer BYD and US manufacturer Tesla, whose sales exceeded 3mn and 1.8mn units respectively in 2023 alone. The merger is also designed to optimise facilities owned by Honda and Nissan, Mibe said. But he denied that it would lead to a reduction in production capacity or asset cuts. The companies instead aim to expand output, Mibe added, although he did not disclose a detailed plan. Nissan is struggling to make a profit, partly because of weak EV demand. The company's net profit slumped by 94pc on the year to ¥19.2bn in April-September, prompting it to cut global production capacity, including for EVs, by 20pc to around 4mn units/yr. Nissan's financial struggles will not affect its collaboration with Honda, but it needs to accelerate its financial recovery, Nissan chief executive Makoto Uchida said on 7 November. But Mibe suggested on 23 December that Nissan's financial situation could cause the proposed merger to be scrapped. Japan's trade and industry ministry (Meti) has yet to make any official comment on the merger talks. But Meti minister Yoji Muto said on 20 December that restructuring the industry would generally help increase the value of private entity and promote innovation. By Yusuke Maekawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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